Wednesday, 26 August 2015

New data confirm that tobacco sales rose after plain packaging

As reported last week by Guido and Catallaxy Files (but no mainstream media outlets that I know of), tobacco sales increased by 0.5 per cent in the first year of plain packaging in Australia. I didn't want to comment until I'd had a change to look at the newly published stats in depth, but I have now done so and the figures in Guido's report are spot on.

21,901,393,720 cigarettes were sold in the twelve months before plain packaging was introduced. In the next twelve months, 22,016,130,420 cigarettes were sold. This is a rise - a small rise but a remarkable one considering that sales had been consistently falling for many years before the policy was introduced.

As Sinclair Davidson has explained, advocates of plain packaging have done two things wrong in order to claim that there was a 3.4 per cent decline in tobacco sales in the first year of plain packaging. Firstly, they compared the calendar years 2012 and 2013 despite plain packaging starting at the beginning of December 2012. Obviously, they should be comparing December 2011-November 2012 to December 2012-2013. If they did that they would see that the difference is just 0.8 per cent.

In the context of a long-term decline in sales of around 5 per cent per annum, a fall of 0.8 per cent is a truly pathetic outcome from a policy that Simon Chapman, a pea-brained blowhard, has compared to a vaccine for lung cancer. But it gets worse for the wowsers...

The second thing the campaigners willfully ignored was the tax refunded on tobacco products which were never sold to the public. This is a significant number of cigarettes when you consider that lots of branded tobacco products had to be taken off the market when plain packaging was introduced and were later destroyed. According to newly released data from the Australian government, it amounted to 284 million sticks. When these cigarettes are subtracted from the pre-plain packaging period, it becomes apparent that sales-to-consumers rose by 0.5 per cent in the first twelve months of plain packaging.

The only missing variable here is the number of refunded cigarettes in the post-plain packaging period. This is unlikely to be zero, but is almost certain to be a lot smaller than that refunded as a result of plain packaging since plain packaging led to an exceptional, one-off destruction of tobacco products (literally). The figures for refunded tobacco in 2013 would make the comparison even more accurate but they would almost certainly change the final estimate by no more than a fraction of one per cent. Whichever way you slice it, the claim that was an immediate effect on sales from plain packaging is bunkum. And that's without even mentioning that growing black market.

You can see the data here, but as it requires a little effort to calculate the total number of cigarettes sold I have included the figures at the bottom of this post. (If you are on a Mac you may need to change the document's suffix to .pdf to read.)

Australia is in the process of conducting a post-implementation review into plain packaging. If this evidence is not front and centre, we will know that the process is a sham. Predictably enough, it seems that the
post-implementation review has already shifted the goalposts. The policy was
explicitly designed to reduce cigarette sales and smoking prevalence.
Since
it is now clear that it has had no measurable effect on either, the
review will instead look at whether it has reduced the appeal of
cigarette packs. That means looking at the same tenuous evidence that
was cited by campaigners in 2011 - evidence that tells
us nothing about the real world effects.

The
reality is that plain packaging did not accelerate the long term
decline in smoking rates or tobacco sales, but it did create a number of
negative
consequences for businesses, consumers and the government itself. Any
serious cost-benefit analysis would find multiple costs and zero
benefits.

As for the campaigners who have been so quiet about the new evidence, don't forget that they vilified Christian Kerr of The Australian last summer when he dared to say that tobacco sales had risen in the first year of the Australian plain packaging experiment. The portly propagandist Stephen Koukoulas was particularly vociferous, describing Kerr et al. as 'smoking fact deniers' and 'tobacco fact deniers'. The hopelessly biased ABC gave Koukoulas and other plain packaging advocates airtime to rubbish Kerr's report.

We now know that Kerr was right. An apology is in order but will never arrive. Instead, there is only silence and tumbleweed from those who claimed that plain packaging was a game-changer.

The data

The government's sales figures are divided between domestically produced tobacco products (ATO) and imported tobacco products (customs). They are also divided between manufactured cigarettes (sticks) and rolling tobacco (loose leaf).

To derive the total number of cigarettes sold, you need to combine the ATO and customs figures for both type of products and then subtract the refunds. For loose leaf tobacco, the government calculates that one cigarette contains 0.8 grams of tobacco, ie. 1 kilogram contains 1,250 cigarettes.

In the twelve months before plain packaging was introduced (Dec 2011-Nov 2012), the figures were as follows:

Manufactured cigarettes: 19,738,170,960

Cigarettes from rolling tobacco: 2,447,248,750

Never sold to the public: -284,025,990

Total: 21,901,393,720

In the twelve months after plain packaging was introduced (Dec 2012-Nov 2013), the figures were as follows:

About Me

Writer and researcher at the Institute of Economic Affairs. Blogging in a personal capacity.
Author of Selfishness, Greed and Capitalism (2015), The Art of Suppression (2011), The Spirit Level Delusion (2010) and Velvet Glove, Iron Fist (2009).

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."